18 July 2024
When an employee becomes unemployed or cannot work due to illness, maternity, adoption, or parental leave, the Unemployment Insurance Fund (UIF) provides temporary relief. It also offers consolation to a deceased contributor's dependents.
The UIF is controlled by the Unemployment Insurance Act of 2001 and the Unemployment Insurance Contributions Act (UIC Act). These Acts, which went into effect on April 1, 2002, set forth the benefits to which contributors are entitled and collect contributions to the UIF. The Contributions Act, enacted in 2002, is generally applicable, with a few notable exclusions, including employees working fewer than twenty-four hours per month, students, public servants, and others.
Responsibilities for unemployment insurance contributions
The employer is responsible for registering the business and deducting the appropriate amount from the employee’s compensation. Under the Unemployment Insurance Contributions Act of 2002, employers who neglect to comply with this requirement will be subject to harsh fines and interest.
During an employee’s employment, the employer is required to contribute 2% of the employee’s salary to the fund (1% given by the employee and 1% by the company). This amount must be deducted at the end of each month and paid to the fund within seven days.
Changes enacted on March 1, 2018, require international workers employed in South Africa, as well as their employers, to make contributions to UIF. Learners hired as per the criteria stipulated in the Skills Development Act are included now. Both the employer and the employee are expected to contribute 1% of the employee's compensation monthly, up to a maximum commitment of R148 72.00 per month or R178 464.00 annually.
Understanding UIF benefits and employer compliance
The UIF fund covers five kinds of benefits, including unemployment benefits, illness benefits, maternity benefits, and death benefits.
Workers may file claims if they have contributed to UIF and are registered with the Fund. However, it's crucial to remember that if you've resigned from your employment, you are not eligible to make a claim. Unemployment compensation claims can only be obtained in the event of termination of employment, retrenchment, or contract expiration.
Contact Invictus for payroll services at 086 173 7263 or email us at admin@invictusgroup.co.za
